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ized. On January 31, 1979, a new call for bids went out on all of the company's stock. On July 2, 1970, CORFO declared the second offering void, alleging that the bids did not meet the requirements or were not in the enterprise's best interests. The situation was later resolved on July 6, when all company stock was transferred directly to the private sector at a price of not less than $US 58 million. On August 10, 1979, CORFO's 79,291,800 shares in Cellulose Composition were sold to COPEC for $US 58 million, $US 15 million of which would be paid in cash and the balance in eight annual installments. To back the credit, CORFO demanded guarantees valued at $US 61,847.258, representing 142.2 percent of the total balance of the $US 43.5 million debt. These sales generally were transparent since all the sales were conducted through a public offering in which each potential investor had the necessary and relevant information to enable him to participate. Once the sale of CELCO to COPEC had gone through, COPEC proceeded to merge the two timber companies. Thus, Celulosa Constitution absorbed Industrias de Celulosa Arauco, forming what is today known as CAYC. This merger enabled the first enterprise acquired to deduct CELCO's cumulative tax losses of $US 48.7 million from the income reported in its subsequent tax returns. The merger left COPEC with 99.9 percent of the stock in CAYC. Complementary Policies No special complementary measures accompanied the privatization of these enterprises. As noted in earlier sections, the worldwide economic system was responsible for the modifications to make the companies more efficient and competitive. Therefore, it should be pointed out that while some of these complementary policies fostered competition in the timber sector, they were not adopted strictly for the purpose of privatization but to ensure a more efficient economic system. However, the timber companies have benefited from a substantial subsidy for planting, which has made forestry and cellulose production more attractive. This subsidy existed before the privatization. In view of the conditions of competitiveness and openness to external trade under which these companies operated, prices and quality were both determined by the market. A product of poor quality would have no place in the international markets; its sales would therefore decline, resulting in a loss of competitiveness. Investment programs expanded substantially after the privatization—especially in the areas of reforestation and the purchase of new forests, where CAYC launched a vast investment program. This would ensure its access to raw materials for the manufacture of cellulose and enable it to carry out its plans for expansion fully, capturing new markets in line with the company's new direction. These investment programs were not part of the sale agreement when the firm was
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PRIVATIZATION IN CHILE